Nu Tek India Ltd - Embrace it for reasonable returns

Nu Tek India Ltd having a Market Cap of  Rs. 144 crores  is in the business of  integrated telecom-infrastructure related services for operators and equipment manufacturers.

The company  came out with an IPO in  August 2008 with a price band of Rs.192 / share, Face Value being Rs. 10/share. Today the same shares are quoting at Rs.40.60/share and that’s a deep discount of  around 58  per cent to its issue price[ face value now  being Rs.5 ].. 

Just think over it – in a bull market when most stocks are available at a premium [ justified or not is a different question ]  it makes sense to pick up stocks which are available at a discount to its IPO price especially so when the PE is not very stretched – it’s around 11.29 and that’s OK for a company which is operating in the ever growing telecom sector.

The company generated revenues of Rs.185.98 during FY 2009-10 as against Rs 159.09 in FY2008-09.. Net Profit was Rs. 15.87 crores in FY 2009-10 as compared to Rs.14.48 croes in previous year. .

Promotors stake n the company stands at 43.73 per cent and that of  the  FII’s  is  8.50 per cent. Nu Tek India closed at Rs.40.60/share today 19 th October, after consolidated net profit surged 70.34% to Rs 8.04 crore on 27.06% fall in net sales to Rs 39.28 crore in Q2 September 2010 over Q2 September 2009.

The stock had hit a 52-week high of Rs 65 on 7 October 2010 and a 52-week low of Rs 29 on 25 May 2010.

One may consider buying Nutek India Ltd on sharp corrections in order to optimize returns which could be in the range of 40 to 50 per cent considering time horizon of 1 to 3 months.

Kishor S. Khot, [Kishor@hbjcapital.com], Equity Strategist, HBJ Capital Services Pvt Ltd